US Quarterly Newsletter - January

Welcome to our second newsletter - to help our US clients and contacts stay up-to-date with evolving issues, our quarterly newsletter brings you a summary of the key European legal stories and updates from the last quarter. We hope that you will find the content of this newsletter useful and encourage you to contact us should you have any questions on the topics covered in this newsletter or indeed if we can help with any other matter.

Intellectual Property

The Trademark Clearinghouse, which originally intended to operate a notification system to warn rights holders about registrations of potentially infringing domain names in new top-level domains ("TLDs") in the first 60 days of general availability, announced in December 2013 that the notification period will be extended indefinitely. The extension of the Clearinghouse notification period is undoubtedly a positive development for rights holders. However, the cost of taking advantage of all the various new rights protection measures, including those adopted by Registries, is mounting. Lucy Nunn discusses the balance that needs to be struck when considering how best to protect brands in the new online space.

Philip Bilney discusses the recent case of Speciality European Pharma Ltd v Doncaster Pharmaceuticals Group Ltd and another which concerned parallel imports and re-branding in relation to a pharmaceutical product containing the active ingredient trospium chloride. The court held in this case that replacing the trade mark on the imported product, with that which was used in the Member State of importation was not objectively necessary to gain effective access to the relevant market.

The new EU Customs Regulation came in to force from 1 January 2014. Regulation 608/2013 replaces Regulation 1383/2003, and sets out new procedures in relation to enforcement of intellectual property rights by Customs. The changes in the new Regulation will, in the most part, be welcomed by right-holders as they reduce the administrative burden involved in enforcing the destruction of counterfeit goods intercepted by Customs officers. Unfortunately, the new Regulation does not address rights-holder concerns such as dealing with goods in transit, parallel imports and/or overruns. Lucy Nunn discusses the headline points and what right-holders need to be do.

Privacy and Information Law

If you thought that 2013 was a big year for privacy, then prepare yourself: it was only the beginning. Many of the privacy stories whose winding narratives began in 2013 will continue to take unexpected twists and turns throughout 2014, with several poised to reach dramatic conclusions – or otherwise spawn spin-offs and sequels. Phil Lee reviews some of the stories likely to dominate the privacy headlines in 2014 including EU data protection reform; NSA surveillance; and safe harbor.

If you thought that 2013 was a big year for privacy, then prepare yourself: it was only the beginning. Many of the privacy stories whose winding narratives began in 2013 will continue to take unexpected twists and turns throughout 2014, with several poised to reach dramatic conclusions – or otherwise spawn spin-offs and sequels. Phil Lee reviews some of the stories likely to dominate the privacy headlines in 2014 including EU data protection reform; NSA surveillance; and safe harbor.

The European Institutions (as well as the UK Government) have been ramping up their digital agendas in recent months, each seeking to instil the importance of cyber security on citizens and businesses alike. It’s all about raising cyber security awareness, but essentially the message is this: companies must understand their systems and data, and must take a proportionate, risk-based approach to keeping them secure. Olivia Henderson discusses the importance of building a strong and resilient digital economy.

In a recent decision of 12 September 2013 (court ref. I ZR 208/12), the German Federal Court of Justice ruled that e-mails sent via “send-to-a-friend” functionality on websites must be considered illegal spam email unless the recipient expressly consented to receive the email. According to the court, responsibility to obtain consent rests with the website service provider, not the user. The court further held that it is irrelevant that the act of sending was initiated by a user, since the indirect promotional nature of ‘send-to-a-friend’ e-mails falls within the scope of German direct marketing regulation under Sec. 7 German Unfair Competition Act. Stephan Zimprich discusses the case and presents some recommendations for marketers.

Technology

David Lewis discusses the new rules for selling digital downloads. Businesses must comply with the new UK Regulations by 14 June 2014 or risk sanctions by consumer protection authorities. Other EU countries are following a similar timeframe, but some (like Germany) are already enforcing equivalent legislation. Most businesses selling digital content online to UK and EU-based customers will now need to review and update user journeys, email confirmations and notices to ensure compliance before the 14th June deadline.

The European Commission’s Licences for Europe stakeholder dialogue concluded in Brussels last November with a number of pledges to help European citizens overcome barriers to the circulation of content in the digital age. It focused on four areas: cross-border access and portability of services; user-generated content and micro-licensing; audiovisual heritage; and text and data mining. Rebecca Fishers reviews the key pledges made.

If you own a smartphone and have been on a plane with it in the last few years, then the chances are that at some point you have been asked by a flight attendant to turn it off and put it away during take-off or landing. This could now be a thing of the past in Europe thanks to a recent ruling from Europe’s air safety agency. Not only that, but being able to take a 3G or 4G call on it above the clouds soon looks set to be a reality following a European Commission (EC) approval of 3G and 4G services mid-flight. Tim Rickard reviews the recent ruling.

Competition

In the EU, Article 102 TFEU prohibits the abuse of a dominant position, where dominance is "a position of economic strength which enables a company to prevent effective competition by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately consumers". The provision curtails the commercial freedom of companies that are dominant (for example, in designing and deploying rebate schemes) and the European Commission has used Article 102 to carry out some of its most high profile market interventions. John Cassels reviews a recent UK case which provides some insight into how this can be applied in practice.

Under the UK's merger control rules, the OFT ("Office of Fair Trading") has jurisdiction to review "relevant merger situations". A relevant merger situation arises when two or more enterprises cease to be distinct and when either the turnover test or the share of supply test is met. John Cassels discusses a recent acquisition reviewed by the OFT and comments that whilst the UK's merger control regime may seem benign (because it does not mandate that proposed transactions should be notified and cleared before proceeding), it has a very wide embrace - it can result in proposed or completed transactions which are not classic mergers or acquisitions being delayed, blocked or unwound.

Corporate and Finance

Some of the most controversial provisions in the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (the "AIFMD") relate to the provisions for controlling the way in which the staff of a manager (an AIFM) of an Alternative Investment Fund ("AIF") (a term which encompasses all types of funds that are not regulated as UCITS, including hedge funds, private equity funds and real estate funds) can be remunerated. Kirstene Baillie and Nicholas Thompsell provide an overview of how the AIFMD will apply to UK authorised AIFMs in the light of some of the important elements of new guidance and its implications for AIFMs.

With its intense focus on the OTC ("over-the-counter") derivatives markets, it feels like the exchange-traded world has come to the European Market Infrastructure Regulation ("EMIR") party both relatively late in the day and unnoticed. However, it seems likely that exchange-traded products are going to be impacted much earlier than their OTC counterparts. This briefing from Ronit Grant, Guy Usher and Luke Whitmore highlights the key issues and recent developments which impact the exchange-traded market.

The wait is over and finally we have the draft legislation and HMRC Guidance Notes implementing the planned reform of taxation for LLPs. This edition of Partnerships Update from Guy Burman and Nicholas Thompsell focuses on how HMRC's plans have changed from the plans originally mooted and what this means for your LLP.

Tax

Employee ownership (“EO”) is established as a concept in the UK, and now has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes. In 2014, the Government will tackle death, taxes and everything else, as it continues to help EO become a mainstream part of the UK economy. In addition to reviewing the rule against perpetuities for Employee Benefit Trusts and introducing new capital gains tax, income tax and inheritance tax reliefs the Government has also asked is there is anything else that can be changed from a non-tax point of view to help EO? Graeme Nuttall discusses the obstacles and recommendations in promoting EO as presented in his "Nuttall Review" (Graeme is the Government's Independent Adviser on Employee Ownership and author of an independent review for the Department for Business, Innovation& Skills on Employee Ownership).

On 5 December 2013, UK Chancellor George Osborne delivered his Autumn Statement, describing it as a plan to deliver a "responsible recovery". He outlined a brighter economic climate than a year ago but said "difficult decisions" still needed to be made. Fieldfisher Tax Partners Hartley Foster, Graeme Nuttall, Andrew Prowse and Nick Beecham give their views on the Chancellor's Autumn Statement.

Derek Hill confirms that the Autumn Statement contains some good news for UK film production, to be introduced in next year’s Finance Act (with effect from 1 April 2014). The Government will make relief available at 25% on the first £20 million of qualifying production expenditure, and 20% thereafter, for small and large budget films from April 2014, subject to state aid clearance. The Government will also reduce the minimum UK expenditure requirement from 25% to 10%, and will modernise the cultural test.

Employment

Louise Fernandes-Owen reviews a number of significant changes to UK employment law over the next 12 months and beyond. These include proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 due to come into force on 31 January 2014; various changes to how claims are lodged under the Enterprise and Regulatory Reform Act 2013 will be introduced on 6 April 2014; expansion of flexible working and increases in statutory pay are also due on 6 April 2014; and in the year ahead we can expect to see changes in the areas of equal pay, managing sickness and caste discrimination legislation.

In spite of disagreement between the Coalition partners about the detail of proposals, shared parental leave is due to come into force in April 2015. At present, the statutory leave entitlement for new parents is more generous to new mothers, who are required to take up to two weeks’ maternity leave but can take up to 52 weeks’ maternity leave. Fathers are only entitled to two weeks ‘ordinary’ paternity leave, together with ‘additional’ paternity leave of up to 26 weeks if certain conditions are met, including that the mother has returned to work. Shared parental leave will allow parents to share up to 50 weeks’ shared parental leave and 37 weeks’ pay, increasing flexibility of leave arrangements between parents. Angharad Schell discusses the proposal and how it has been received by employers and trade unions.

The headaches faced by employers struggling with the Government’s flagship pension reforms have received widespread national media coverage. At its simplest, automatic enrolment requires certain workers to be automatically placed into a pension scheme and provided with mandatory pension contributions. Any employer could be forgiven for underestimating the challenges of these reforms, which are being introduced for different employers at different times, with larger employers coming under new laws before smaller employers. The mistake that some employers have made is to simply see automatic enrolment, as an accounting item, something to be factored into projected staffing costs over the coming years. Although it is right to take account of this cost, the real price lies in administration. Lee Harding discuss this further.

Following an EAT decision last year in Toal and another v GB Oils Ltd , ACAS has launched a consultation on a revision to the Discipline and Grievance Code of Practice. ACAS is seeking views on a change to those parts of the Code of Practice relating to the legal right workers have to be accompanied at a disciplinary or grievance hearing. The EAT decision suggested that the Code did not accurately reflect the law on the statutory right of accompaniment. In Toal, the EAT determined that if a worker has been invited to a disciplinary hearing then, provided they have made a reasonable request to be accompanied to the hearing, they have the right to chose whoever they like as a companion provided the companion is a fellow worker or trade union representative i.e. it is the request to be accompanied that must be reasonable and not the worker’s choice of companion.

Immigration

On New Year’s Eve, transitional controls restricting the right to work in the UK expired for Romanian and Bulgarian nationals and from 1 January 2014 Romanian and Bulgarian nationals have the same access to the UK labour market as any other European Economic Area (“EEA”) national (aside from Croatian nationals who require authorisation to work in the UK). Although Romanian and Bulgarian nationals no longer need an accession worker card or registration certificate as evidence of permission to work or of their right to reside as a worker, it is vital that all employers comply with their duty to prevent illegal working and complete their document checks to ensure that any prospective employee is able to work in the UK. It is imperative that documents are validated, copied and certified on the employee’s first day of work.

The Immigration Bill was introduced into the House of Commons in October 2013 and, subject to its Parliamentary progress, it is expected to receive royal assent in spring 2014. The Immigration Bill will reform the removals and appeals system, making it easier and quicker to remove those with no right to be in the UK; it will end the abuse of Article 8 of the European Convention on Human Rights (the right to respect for private and family life); and it will prevent illegal migrants accessing and abusing public services and the labour market. Lynn McCloghry discusses the proposed measures which are designed to make the UK the least attractive destination for illegal immigrants whilst it continues to promote the UK as a destination for the “brightest and best migrants”.